If you’re well into social media already, you might be familiar with a lot of this information already.

If you’re not working in social media but you want to understand how you might be able to use it to help your business and your customers, this post should be useful for you. Unlike Twitter, there is no short version, but I’m always happy to help if you have any questions. Just ping me!

Start here

First – Twitter is probably something you should know a little about now. Here’s Comscore data to April of Twitter versus LinkedIn, NY Times and Digg.

Two more signals of it being mainstream – it’s been on Oprah, and it’s been on the Daily Show. This isn’t a fad, and although it might change, Twitter isn’t going away.

What is it, and how do I use it?

First, go and sign up for an account. To quote:

You can’t understand Twitter, Facebook, or blogging by reading an article in a magazine or a report from your CMO.

George F. Colony
CEO, Forrester

The basic idea is this. You put in a short message of 140 characters or less, which is by default available for anyone to read.

That’s it.

It’s similar to Facebook status messages – except in Facebook, only your friends can see your messages. It’s similar to blogging, except your messages can only be 140 characters long.

At first glance, it’s not a mindblowing concept. But let’s examine more closely why it’s worked out so well.

Why is it so goddamn popular?

One – the messages are 140 characters.

Let’s do a little experiment. Take out a polite email you’ve written recently to someone you don’t know – maybe a request for an informational interview, or an invitation for someone to speak. Now, try and boil it down to 140 characters or less.

Imagine yourself in the position of the person you’re emailing. Of course, it’s nice to get a polite email. But if you’re pushed for time and just trying to absorb information as fast as possible, the 140 character version will probably get the message across faster.

Now consider Generation Y. There are studies knocking around that demonstrate that the attention span of Gen Yers is decreasing. So not only are they getting more information per unit time, but they don’t have the patience to read through an entire article. (Maybe I should just twitter this article out instead? hope u r not gen y)

Two – you get messages in real time.

In tech, we like to keep out eyes open for trends – and there’s one happening right now – real time. To quote:

I have always thought we needed to index the web every second to allow real time search. At first, my team laughed and did not believe me. With Twitter, now they know they have to do it. Not everybody needs sub-second indexing but people are getting pretty excited about realtime.

Larry Page, Google Founder

Twitter is one of the reasons Page is talking this way. You can get a solid idea from Twitter and its surrounding services what users are talking about right now.

Three – you can access it from anywhere.

Twitter is pretty goddamn open with their API. Check it out – if you’re running Mac or Linux, hop on to the command line and type this:

curl http://twitter.com/statuses/public_timeline.xml

… or this …

curl -u user:password http://twitter.com/statuses/friends_timeline.xml

That’s it – you’ve just queried the Twitter API. If you wanted to, you could recreate the entire twitter user page with calls to the API like the ones you just made. That’s something that makes Twitter different from Facebook. Combine this with some talented developers and great ideas, and some amazing applications like twistori start to appear.

Four – location information.

Most importantly, people have written twitter clients – applications you can use to read and update Twitter – for everything. Multiple iPhone clients, any smartphone, and you can even update via SMS. For some of these clients, the location of the update is included – and location based services are also ramping up right now. How’s that useful for twitter? Check out this demo, which pinpoints where people are twittering about swine flu in the US right now.

What do people actually WRITE on Twitter?

Like Facebook or blogging, people have a whole bunch of stuff to talk about. I’ve put it into four categories.

• RSS replacement. TechCrunch twitters out 140 character versions of its stories that are quicker to parse than their RSS feed. So, it can replace RSS for a user. An article précis can come from random users as well as the article writer.
• MLIA. People just tweet about the unimportant details of their lives. I don’t have any data on this, but I believe most tweets fall into this category.
• Self-promotion. Julia Allison is a great example of this – not particularly being famous for anything except being a minor web celebrity. She’s making the service work to promote herself, and being pretty successful so far.
• Real celebrities like Oprah, Queen Rania and Shaq, who are using it to build on their existing profiles or promote a cause. Here’s another place where real time works – a Shaq fan get get updates from their idol on exactly what they’re doing right now. That’s bringing fans and celebrities even closer together, and it’s reasonable to expect celebrities that use social media to start to outstrip those who don’t.

Of course, there are users like Sockington the cat that defy categorisation – but I hope these four cover most bases.

One more thing to consider – Patrick Swayze is not dead. Because Twitter users use each other as reference points, information spreads rapidly throughout the network, whether it’s true or not.

How should / shouldn’t my company use Twitter?

What I can do is show you some examples of how people are using it to help you figure it out.

First of all, to quote from a Kellogg study:

There is a measurable connection between what is being said about a product in online posts and real-time customer behavior.

Not shocking news. The interesting part is how Twitter is helping us to peer into those conversations – twitscoop and twends are two tools you might want to use to do so. How’s that useful? Let’s say you’re putting out a superbowl ad. You can use these tools and others to understand immediately how well your campaign is going, and adjust it accordingly.

Now, let’s see two good examples of how companies are using Twitter.

• Kogi is a Korean barbeque truck that drives around LA, tweets out where it’s going to be, and then shows up to the crowd that’s been following them on Twitter.
• Threadless, a Chicago based t-shirt design community, twittered an official press release to request tweets that are voted on and made into t-shirts.

These examples work because they lean on Twitter’s strengths – community and real-time. That said, it’s not all roses – you can be a hero or a victim.

Twitter’s mean streak

Skittles decided to take the obvious route, and just replaced their home page with a live Twitter stream next to Facebook, Flickr and Youtube content. Of course, the internet sensed an opportunity for vandalism, and started tweeting rude stuff so it would appear on the home page. They’ve since scaled back to just use their YouTube homepage, where the vast majority of comments are positive, but there’s also these:

• How is this useful. I’m not buying skittles because of this. Heck, I wouldn’t have heard of this without ZD NET social media fails
• wtf is this
• i love sex !

Using social media marketing means asking your customers to speak for you, and that’s risky. First time around, Skittles gambled and lost.

Here’s another. Consider the example of Motrin, which is a painkiller. They put out this ad:

Some influential folk in the twitter community took pretty serious offence to the ad. The result?

So – there you have influential people in social media killing off hundreds of thousands of dollars of investment. Gone!

Can’t I just pay to get buzz?

It might be tempting to employ people to try and control that conversation and mitigate the risk, and that’s just what companies like Izea do (although the FTC may have something to say about it). Here’s their side of the story.

In my opinion, one should resist this temptation. An employee at Belkin famously tried this, paying people a small amount to write positive reviews of their products on Amazon.com. That didn’t turn out to be good PR for anyone, and the employee was hung out to dry by Belkin.

Granted, Izea argues that “sponsored conversations” should be marked as such, but it doesn’t sit well with me. People participating in this are advertising to their friends, and one of the reasons why social media and word of mouth advertising is so effective is that people trust their friends to give them an unbiased opinion. Directly influencing the conversation with money or something similar breaks that trust.

So, what the hell do we do?

This is the most interesting part of this whole deal. There is no solution for everyone. The effectiveness of old school media is drying up. It’s problematic to influence the conversation directly. We just have to come up with clever solutions, like others have, and accept that the days of throwing money at a media plan are dying out.

First the obvious parts:

• Being a successful blogger takes a long time and is a lot of hard work.
• Even doing that won’t make you boat loads of cash.
• You need to stay disciplined in your posting.
• Get other sites interested in you through reviews, guest posts & media connections.
• Use primary market research.

Now the interesting parts. Chris’s position is that Adsense ads suck, because you’re trusting Google to figure out what’s contextual. If your site links out to stuff, you’re telling your visitors that if they trust you, they should trust this ad, and that link is being driven by an algorithm that could well be wrong.

I would argue that most people understand the weak trust link when they see Adsense embeds, but it follows that a weak trust link means that the advert is going to suck at being effective anyway. I’d not thought about this before, and it’s definitely worth considering.

Chris’s solution for monetisation is the freemium model – a blogger’s product is information, so why now charge for some of it. It’s not going to work for everyone, but Chris has made it work for a non-targeted blog, so that’s encouraging.

In reading it, a few quotations stuck out:

• “I work harder than most people I know, and the other unconventional success stories mentioned in this report do the same.”
• “I derive too much emotional validation from the daily state of my network. When lots of people are subscribing, the comments are up, and the links are rolling in, I feel great. When the numbers are down, I feel bad.”

Right there is the real reason Chris’s blog has been so successful – he clearly works his ass off.

The worrying parts

Interesting fact: a lot of the most popular blog content is about how to become a popular blogger. The whole hook of Chris’s report is on how to be just a successful as Chris. I’m not disputing his incentives at all, but when you strip away the excellent graphic design and verbiage, that’s what it boils down to.

Here’s the problem. Folks read his report because they want what he has, but for whatever reason (family, the day job and so on) they can’t invest the time needed to actually DO it. If they did, thousands of super successful blogs would start to spring up. It never happens. Even if it did, since global web attention is a stretchy-but-limited commodity, as supply increases, price goes down and folk spend less time with one individual blog.

I’m not saying it’s a pyramid scheme – Chris isn’t charging, isn’t benefitting, and in fact, licensed this report with CC-BY. But some elements are there – one successful guy at the top and a lot of people who want but can’t attain the same success.

That’s a really common thing to do, but there are a few choices you have to make. If you make a tool and widget that goes into it, does that widget conform to standards set by agreement, or do you have the power to change standard widget design whenever you want to? Is it free for other people to make widgets? Does any of this matter to the consumers?

I set the rules around here

Let’s say that you create a product + widgets, and you’re the only one that sells both. It’s likely that you’ll sell the product cheap and the widgets are relatively expensive, because that cost is sneakily hidden from the customer. This is the “razor blade model“, which you all know about.

Now let’s say that you create a product + widgets, you make the tool and control the standard widget, but you allow anyone else to make widgets. (This could be the App Store or Minidisc.) Now, you really have two sets of people to worry about – your customers and your widget developers.

• Your customers would like to see lots of different widgets out there, because that probably makes your platform more appealing.
• Your widget developers would like to make money. So they want a huge user base, and for you not to screw them by changing the rules – like suddenly integrating features of their widget into the main tool, wiping their business out.

I abide by the standards

One way for you to help your widget developers feel like they’re not going to get screwed is give control of widget standards to a standards body like W3C or ISO. The disadvantage is that you lose control – if the market changes and you want to make a change to the standard widget, there’s a lot of buggering around. Even worse, those standards bodies probably work with your competitors too, so it’s going to be hard to make a change to the standard that will benefit you.

The answer is changing

This sort of stuff is becoming more important in software. That’s because:

• It’s getting easier to develop software (even the kids are doing it!)
• Customers are getting used to applications with a shedload of functionality, and one company might not have the resources to do all that, no matter .

I’ve seen Windows crash in environments like this quite a few times. Not seen a Linux / Unix crash yet, but I’m sure it’s out there.

During a trip through LAX, I noticed that these machines are being used by Best Buy to sell a variety of electronics to bored travellers – headphones, flip style camcorders, and of course, iPods.

Personally, I was just curious when I was snapping photos, but as I backed away, one fellow actually went and used it.

As he made his selection, the local security guard looked on, either nervous, or just curious that someone was using the thing.

Is selling consumer electronics in this way actually viable?

Before I answer this question, I’ll relate an event that happened a few hours ago.

On our pilgrimage to the local Ikea today, we aimed our trolley straight for the self-service lanes. There was one employee – an older lady – looking after the six self-service checkouts, so she came and did our checking out for us.

This annoyed us.

Here’s why this happened. The Ikea assistant believed that getting service at a checkout is better than not getting service, and she wanted to help. We, the two customers, did not.

Please get back the the point

I would argue that there’s a generational shift happening. Consider these two scenarios.

• Generally older folk: go into a Best Buy, a Staples, a Currys or Dixons and chat up the salesperson. They don’t know too much about technology, so they’re more likely to take their advice on what to buy – and that advice will be to buy something in the shop that’s in stock.
• Generally younger folk: research everything they can about a category online before even thinking about buying it. They might buy online or in a store – they don’t value as much whatever added services might be available in store. In short – they can serve themselves.

So – if a product is strongly price controlled and generally very reliable – like the iPod – these weird looking contraptions will offer an element of convenience. 24 hour service. No one getting in your way. All while offering the same price as everywhere else, instant access to the product, and no delivery fee.

Balance that against the natural caution of getting a 300 dollar product out of a vending machine. As the machines get more popular, this caution might dissipate, and the machines become more viable.

Most new businesses have a chicken and egg problem – this one, it seems, is no exception.

You may not be able to quite see it, but some poor person actually signed on top of the display on this PIN machine.

A reminder that even user interfaces we take for granted can be hard to use.

It seems that Dell has organised a computer gaming league for titles like COD4, WOW, Counterstrike and Forza, along with less traditional titles like Guitar Hero 3.

It makes sense from the larger perspective – it’s clear that hardware has become a commodity in the PC market, and margins are pretty thin *except* in the case of high powered PCs. One way for Dell to raise revenue is to raise demand for higher end gaming hardware, and this seems like a nice way to stimulate demand.

However – it’s not all roses, and creating college based online teams can have its drawbacks. With physical sports, bonding groups at the campus level works well – college “jocks” are a familiar sight on the American football field, and tailgating is a tradition. Could it be the same for online gaming?

1. It’s not as easy to watch an online game
2. It’s certainly not a traditional sport or pasttime
3. Online gamers might feel ambivalent about the association with other college sports

The fact is that online gaming is starting to turn into a sport. It remains to be seen whether the models applied to physical support apply here too.

I’ve popped in a couple of times – it’s a gadget shop, I’m a nerd – but I’m still absolutely confused as to what the store’s purpose is.

You’ve probably seen the products before. If not, I offer you this link. Hanspree products are all pretty much the same – slightly crappy LCDs with a novelty surround.

Yes, that’s a box of chips. No, the other chips.

Like a lion in Zion

So where might you actually find something like this being used? Here’s our best guesses:

• A kids bedroom
• A themed environment (like a baseball fanatic’s recreation room, or a shop)

Perhaps I’m being a little pessimistic, but I don’t think these are huge segments in the US.

Driving Footfall

It seems to make sense to design the store to appeal to the same people that might buy the products. So here’s what the store looks like:

That’s right – it looks just like the Apple store, except it’s empty

Again, I’m going to stab in the dark and guess that a store that looks like this would appeal to trendy 20 – 30 year olds or roll-neck, designer glasses wearing 50 year olds, both of them fresh from the Apple store.

What I can’t work out is where the crossover between these two segments lie. It’s possible that they are going for trendy designer parents with young kids who have themed bedrooms. That strikes me a pretty narrow segment for a significant investment.

The other possibility is that this store is a cock-up of sorts. There are plenty of reasons why it might have happened – the store looked that way before they got there and they didn’t want to change it, the store designer is being inspired by Apple rather than the customers, and so on. I think it’s most likely that Hanspree HQ have had success with this format overseas, and didn’t want to modify it for the US market.

I don’t have enough data to say either way – but if I had to guess, that’s the one I’m going with.

What’s the System/360?

Back in the day, you bought a computer and programmed for that computer alone. If you bought another one, this ran a different way and you had to program it differently. Now imagine how many PCs you’ve been through, and imagine how it feels for a company that wants to buy a computer, then grows and needs a bigger one. It sucks, and every time you switch it doesn’t matter if you buy an IBM, a Fujitsu or whatever – you have to rewrite everything anyway.

The S/360 was the first line of computers where architecture and hardware were separated. That meant that you could buy a little one, write programs for it, then buy a bigger one when the time came to upgrade. It meant less of a pain in the arse for customers, and a lock-in for IBM. Kerching!

The only problem was that the project was planned to cost $5bn over four years, which was way over IBM’s annual revenue at the time. They went ahead with the project – but why? They answer, as usual, is a bunch of different reasons.

IBM, the organisation

Tom Watson Sr, who pretty much started IBM from scratch, was a Victorian, moral, old guy. This song probably helps explain better than I can. His son, Tom Watson Jr., was handed the reins just as Sr was shuffling off his mortal coil. They didn’t get on. The father never trusted the son.

This is Watson Sr. Definitely a crusty old dude.

So the son, we suppose, wanted to do something to make IBM his own. But there’s more.

Fear

It seems that there was a culture of fear at IBM at the time. Fear of competitors, sure – but also fear of doing nothing and being squashed as a result. People argued with each other all the time, but the strong culture that Watson Sr. had installed kept the company together and working. This is the amazing part – the agitation that people felt was what drove them to win.

Andy Grove describes some similar stuff in his book about his time at Intel.

"Fear is powerful in creating and maintaining passion. Fear of competition, fear of bankruptcy, fear of being wrong and fear of losing can all be powerful motivators."

The strange part for me is that history repeated itself. There’s a formula for a successful culture here, but certainly not a comfortable one.

Here’s another one:

"Success breeds complacency. Complacency breeds failure. Only the paranoid survive."

You’ve probably heard that one before, but it’s fascinating. Any successful company’s first instinct is to recognise what they did that was successful and repeat it. As time goes on, they become resistant to doing anything else – I mean, it seems completely illogical. Why would Microsoft do anything to endanger Office or Windows? Why would IBM leave hardware and turn into a services company? But the problem is that it leaves you completely open to attack by a competitor who is free from this way of thinking.

Lots of companies have thought a little further ahead, and released products that cannibalised their own – it’s better to do that to yourself than let someone else do it for you.

The S/360 was one of those projects, and IBM was one of those companies.

The Tutor

The class was taught by Prof Tedlow, who is one of the superstar professors at HBS, and a specialist in business history. It’s unexpected to see someone that skinny fill a stage, but that’s exactly what happened. He had help – the room was littered with old-school IBMers, including a couple of superstars.

That gentleman on the left is Tedlow. And on the right, Gene Amdahl, the chief architect of the S/360. (Oh – and he quit IBM, started Amdahl computers, which flopped and got bought by Fujitsu, to the amusement of the chap now working at Fujitsu who was sitting to my left.)

One more that I didn’t manage to get a picture of – Bob Evans, the S/360 project lead (hat tip to Karae in the comments).

The more things change

There’s nothing really new that happens in business – culture changes, products that change the industry, engineering versus sales and so on.

I thought that technology was an exception.

Maybe not so much.